How does Minnesota compare on childcare spending?

In the 2023 legislative session, lawmakers dedicated over $6 billion in new money to Minnesota’s welfare system. A little over $1 billion of this money went to various childcare programs in Minnesota. Lawmakers argued that new spending was necessary to reduce the cost of childcare for vulnerable Minnesotans.

As American Experiment’s report has shown, however, Minnesota was already a generous state for welfare making extra spending unwarranted. This is true when we look at spending as a share of the budget and per person in poverty. It is also true when we look at specific programs such as Medicaid and cash assistance (which I discuss here and here).

But how does Minnesota compare on childcare spending?

While substantially smaller than Medicaid, childcare assistance takes a considerable share of Minnesota’s welfare budget, so it deserves some scrutiny. The following is a look at how much Minnesota spends on childcare and how that spending compares to other states.

The structure of childcare funding

After the passage of welfare reform in 1996, funding for childcare assistance was consolidated into the ChildCare and Development Fund (CCDF). For Minnesota and the rest of the country, CCDF is the mechanism through which the federal government provides funding.

Under CCDF, funds fall into four categories: discretionary, matching, mandatory, and state MOE. Here is where each type of funding comes from.

  1. Discretionary funds: This portion of the CCDF comes from the ChildCare and Development Block Grant (CCDBG). The CCDBG, which was created in 1990, is the country’s main federal funding program for childcare assistance. Additionally, states can transfer 30 percent of their federal TANF funds into the discretionary fund.
  2. Mandatory Funds: This portion of CCDF funding comes from section 418 of the Social Security Act, also known as Childcare Entitlement to States (CCES).
  3. Matching funds: Matching funds are also provided by the CCES and are apportioned to states based on the number of low-income children younger than 13. States are required to match federal funding usually at the Medicaid matching rate.
  4. State MOE funds: States are required to maintain their Pre-1996 level of spending on childcare, also known as Maintenance of Effort (MOE).

In addition to the CCDF funding scheme, states can use federal and state TANF dollars on childcare directly. These funds, if not transferred into the CCDF program are counted separately from CCDF.

So, how does Minnesota compare when it comes to CCDF and TANF spending on childcare?

How Minnesota compares

According to American Experiment’s recent report looking at Minnesota’s welfare system,

In 2019, Minnesota spent $296 million on childcare from both CCDF and TANF direct spending. Compared to the rest of the country, Minnesota’s CCDF and TANF spending on childcare was the 13th highest. And when controlled for the number of children under 6 living in poverty, Minnesota spent an equivalent of $6,381 in CCDF and TANF funds per child. This is the third highest amount among the 50 states, and more than double the median state amount.

Figure 1: CCDF and TANF Childcare Spending per Child Under Six Living Below Poverty, FY 2019

Source: US Census Bureau American Community Survey; US Department of Health and Human Services

Not only that, but

Overall, Minnesota served a higher proportion of children in poverty on CCDF (44 percent) compared to the average (38 percent) and median (36 percent) state. That remains true even after counting older children. And while spending per child goes down when older children are accounted for, Minnesota still ranks at the top.

This is not all the money that states spend on childcare, however. In addition to CCDF and TANF spending, states also spend on programs such as Head Start, publicly funded Pre-K programs, and early learning scholarships.

Headstart and other programs

Created in 1967, Headstart provides comprehensive development services, including early childhood education to children under five and pregnant mothers. Generally, Head Start is primarily funded by the federal government with states providing a 20 percent match. However, states can invest extra money to increase the number of children enrolled.

Looking at the data,

in 2019, Minnesota was one of only nine states to dedicate extra state funds to its Head Start program to enroll more children.


According to a report by Rutgers University’s National Institute for Early Childhood Research, in the 2018-2019 school year, Minnesota spent $6,738 (adjusted for state cost of living differences) per child enrolled in its state funded Pre-K programs. Minnesota ranked 11th among the 50 states and surpassed the national average spending per child of $5,374.

In the same year, MInnesota spent $68 million on a program providing Early Learning Scholarships to low-income parents to access highly rated childcare programs.


Suffice it to say, that the data does not support the idea that Minnesota was not spending money on programs that support low-income Minnesotans before the 2023 legislative session.

Much like Medicaid and cash assistance, in 2019, Minnesota’s childcare assistance programs were among the most generous in the country.